Legal changes in 2025 - what should developers be aware of?

In early 2024, the previous government published the consultation response on the Building Safety Levy. The proposals include:

• charging the levy on all new residential buildings in England that require building control approval with certain exemptions, such as developments with fewer than 10 units or 30 bed spaces for PBSA;
• a transitional period for those developments which have commenced i.e. projects already at commencement when the levy ‘goes live’ will not be subject to it and there will be a grace period for any project that has already entered the building control process on the date the levy comes into operation);
• a single levy payment to be paid by developers before a completion certificate can be issued; and
• calculating the levy on a per square metre basis, similar to the Community Infrastructure Levy (CIL), but with varying rates to reflect local land values and house prices. 

A further consultation to determine the methodology for the calculation was launched and the response is awaited. The Government intends for the levy to come into effect in Autumn 2025. Developers should monitor developments closely and factor this levy into their project costs as best they can to ensure compliance when this comes into effect.

The Procurement Act 2023 will come into effect on 24 February 2025. The Government is developing a new National Procurement Policy Statement (NPPS), a statutory document that reflects the Government's public procurement priorities. The forthcoming NPPS is anticipated to emphasise value for money and provide more opportunities for social enterprises and smaller businesses. 

The policy objectives outlined in the NPPS must be taken into account during procurement processes. Consequently, developers bidding for public contracts or considering projects such as joint ventures with local authorities will need to familiarise themselves with the new NPPS upon its release to ensure their proposals align with the priorities and expectations of public authorities.

More generally, the Procurement Act 2023 makes a number of changes to the current public procurement regime including providing contracting authorities with more flexibility in how they structure their tender processes, increasing the transparency around the procurement process.  Significantly, the Procurement Act 2023 now extends the procurement regime to cover ongoing contract management and for some larger contracts high level performance reviews will be published on an annual basis. There will also be an obligation to publish notices if contracts are terminated, for example, due to natural expiry or termination by either party as well as other measures to strengthen the powers to exclude/debar certain categories of bidders. 

The Government will publish a response in early 2025 to the consultation on MEES for non-domestic premises, which was conducted in 2021. The previous government had indicated in a 2019 consultation response that all commercial buildings would need to achieve a minimum EPC rating of “B” by 2030. 

The Government has launched a consultation with a view to reforming the existing Energy Performance of Buildings (EPB) Regime. The consultation applies to both non-domestic and domestic buildings. It suggests reform of five areas: 

• updating EPC metrics;
• refining requirements for EPCs and Display Energy Certificates;
• improving data management protocols, strengthening quality control; and
• revising Air Conditioning Inspection Reports. 

The consultation closes on 26 February 2025 and views are sought from a broad range of stakeholders, including developers. A response to this consultation with resulting amendments to the current regime may be forthcoming in 2025. 

The Law Commission has launched Part 1 of a two-part consultation which considers how the current security of tenure regime under the Landlord and Tenant Act 1954 might be reformed. The consultation proposes four options: abolishing security of tenure, creation of a ‘contracting in’ regime, maintaining the current contracting out process or mandating security of tenure by default.

Part two of the consultation, which could be published in 2025, will seek views on how the model (selected via the first consultation) should work and may also consider (if appropriate) periodic tenancies, the grounds to oppose renewal tenancies, the interaction of lease renewal with environmental regimes and methods of resolving disputes arising at renewal.

Once the first and second consultations have concluded, the Law Commission will publish a report with their final recommendations for reform and it will then be a Government decision if / when to implement those recommendations.

Disclosure of details pertaining to land ownership and development are expected to remain themes of consultation, regulation and legislation in 2025. 

Overseas entities that hold or acquire land in England and Wales need to be registered on the Register of Overseas Entities (ROE). The Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025 were published in draft on 7 December 2024. The principal purpose of the regulations is to allow any person to apply to obtain trust information held on the ROE (subject to certain exceptions, e.g. where an application relates to multiple overseas entities). This information would include details of trustees, beneficiaries and any protector or enforcer. It is likely that the regulations will be passed (subject to amendment) in 2025 and, if made, applications for trust information would be possible from 31 August 2025.

A report on the outcome of the consultation on the transparency of land ownership when trusts are involved in the ownership structure may be published in 2025. The consultation ran until 21 February 2024 and broadly considered how ownership of land involving trusts can be made more transparent. The consultation also sought views on options to widen access to trust information held on the ROE (the options being additional to the abovementioned regulations). 

The Procurement Act 2024 will require greater procurement transparency and the establishment of a new online register of contracts.

The Government has pledged to implement provisions in the Levelling–up and Regeneration Act 2023 (following technical consultation). These provisions, which may take effect in 2025, include a requirement for housing developers to notify planning authorities prior to commencement of development and to report annually on delivery / progress. Local authorities will be given power to decline applications from developers who fail to build out planning permissions at a reasonable rate. 

The revised NPPF, published at the end of 2024, is now in effect (with the changes to plan-making applying from 12 March 2025). The focus is on increasing the number of homes built while emphasising sustainable development. Key provisions include:

• Presumption in favour of sustainable development: Local authorities must grant planning permission unless there is a 'strong' reason for refusal; making it more challenging for a local authority to resist development.
• Revisions to the ‘Standard Method’ (housing supply): Designed to maximise housing delivery across all regions by application of the Government’s standard method (which is no longer an “advisory starting point”).
• Brownfield Land: There is a greater emphasis on using brownfield land and high-quality design, with substantial weight given to proposals that meet these criteria.
• Green Belt and Grey Belt: Local authorities are required to conduct a Green Belt Review if they cannot meet identified development needs. Developers can now consider “Grey Belt” land for development, newly defined as previously developed land or land within the green belt that does not significantly contribute to green belt purposes.

The revised NPPF presents both opportunities and challenges for developers. It requires strategic planning and collaboration to meet new standards and leverage available land effectively.  Further regulations and changes to planning policy can be expected this year.

The Government is proposing a new Nature Restoration Fund, requiring developers to make a single payment to address the environmental impacts of development on a larger scale (therefore moving away from the traditional project-by-project method). As developers are already required to cover the cost of environmental impacts, this is not intended to be a new financial burden. The proposed reforms aim to secure planning consents more quickly and make it more efficient and effective to meet environmental obligations. 

The Taskforce on Nature-related Financial Disclosures (TNFD) has published a framework and recommendations for disclosure of nature-related financial risks (these include biodiversity loss and ecosystem degradation). 

The Better Buildings Partnership (BBP) has recently published guidance for UK commercial real estate companies on understanding and applying the framework. This guidance has broad relevance, to developers, property owners and investors.

The recommendations in the framework do not yet form part of UK mandatory reporting, however, there is some expectation that reporting may be incorporated into International Sustainability Standards. The TNFD will publish final guidance on nature transition planning in 2025.

The Department for Energy Security and Net Zero (DESNZ) has issued a joint consultation (with Ofgem) into the regulation of heat networks. A set of draft heat network authorisation conditions have also been published. The consultation focuses on consumer protection requirements such as standards of conduct and treatment of vulnerable consumers. DESNZ anticipates that the consultation will be of particular interest to the heat network industry, including developers. The deadline for responses is Friday 31 January 2025. Alongside this, Ofgem has published a consultation “on proposals for the authorisation and regulatory oversight of heat networks in England, Scotland, and Wales” which includes how Ofgem will “approach monitoring, audit, compliance and enforcement of authorised persons”.

Proposals for amending Compulsory Purchase Order (CPO) powers have been published and an open consultation launched on the topic of Compulsory Purchase Process and Compensation Reforms. Resulting changes could be made during 2025.

The Government’s intention is “to improve land assembly, speed-up site delivery and lower costs of development”. It will do so by reducing administration costs and increasing the efficiency of the CPO process - with a direction to remove the payment of hope value for schemes in the public interest. It will also seek to ensure that the balance of the assessment of compensation awarded to landowners is fair and quicker decisions on CPOs can be made. 

The Renters’ Rights Bill seeks to transform private renting by withdrawing fixed term assured shorthold tenancies (ASTs) and abolishing section 21 ‘no fault’ evictions. 

The Bill also introduces new grounds for eviction under section 8 and modifies some of the existing grounds. A greater degree of tenant protection against rent increases and rental bidding will also be legislated for.

The Government intends for the Bill to be enacted by spring 2025. 

Further enfranchisement and right to manage reform is on the horizon as the Government considers how best to implement (and amend) measures within the Leasehold and Freehold Reform Act 2024 (LAFRA). 

These measures include placing a ban on new long leases of houses and introducing lengthier lease extensions (990 years) for existing leases of both flats and houses. 

A wealth of enfranchisement provisions are also due to take effect. They include the removal of the 2-year ownership requirement for claims (expected to take effect as early as January 2025). It will also become easier to collectively enfranchise in mixed-use properties when changes to the percentage threshold of non-residential floorspace are brought into effect in spring 2025.

Leaseholder rights will be bolstered in connection with the calculation of service charges, calculation of enfranchisement premia and recovery of legal costs. Aspects of the LAFRA, pertaining to rates and enfranchisement calculations, remain under challenge on human rights grounds with a number of applicants seeking permission to apply for judicial review. 

Freeholders will also receive protection from estate service charges to align their rights with those of leaseholders.  

The Government intends to make further reform to leasehold and commonhold in 2025, with a draft Leasehold and Commonhold Reform Bill to be published in the second half of 2025, with a central focus of that Bill being “reinvigorating commonhold” (a white paper on reforms to commonhold will also be published early in 2025). 

Consultations will be launched on issues such as unaffordable ground rents, ground rent capping and banning new leasehold flats.

Private Rented Sector: the Government proposes to consult on changes to achieve a minimum Energy Performance Certificate (EPC) rating of “C” by 2030.

Social Housing: there will be a separate consultation on applying Minimum Energy Efficiency Standards (MEES) to social housing, which currently lacks a standard, aiming for a minimum EPC rating of “C” by 2030.

The Government published its Remediation Acceleration Plan to address unsafe cladding on residential buildings in England. The key provisions include:

• Create a legal obligation on landlords of relevant buildings to remediate unsafe cladding, supported by significant financial consequences and a new criminal offence.
• Give regulators (local authorities, fire and rescue authorities, and the Building Safety Regulator) enforcement powers.
• Encourage and support developers to remediate 80% of buildings with relevant defects by July 2026 and on 100% of those buildings by July 2027. There will be a "joint plan" (Government and developers) which will work alongside the developer remediation contract and Responsible Actors Scheme. 

The Government intends to legislate to create a "comprehensive building register" and including 11-18m residential buildings, to close the information gap. To improve transparency, the Government will legislate to require the registration of beneficial ownership, to ensure that the real decision-makers behind building ownership are identified. This measure aims to tackle issues where the identity of the parent company is obscured, facilitating enforcement and remediation efforts. 

Further legislation is expected in respect of building safety to address these proposals and following the recommendations in the Grenfell Tower Inquiry Phase 2 report published in September 2024. It is anticipated that the Government’s full response to the Grenfell Tower Inquiry Phase 2 report will be published early in 2025. 

In response to the CMA housebuilding market study, the Government has confirmed that it will introduce a new consumer code for housebuilders and a New Homes Ombudsman service. The intention is to empower homeowners to challenge developers where there are issues with the quality of their homes. To put this into effect, the Government will need to pass secondary legislation, which is anticipated to occur in 2025.